Sample Business Contracts

Nonstatutory Stock Option Agreement - Critical Path Inc. and William McGlashan Jr.

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                              CRITICAL PATH, INC.



Critical Path, Inc., a California corporation (the "Company"), granted an Option
on November 8, 2001 to purchase shares of its common stock (the "Shares") to the
Optionee named below. The terms and conditions of that Option grant, as amended
and restated, are set forth in this cover sheet, the attachment, the Company's
1998 Stock Option Plan (the "Plan") and in the Optionee's employment agreement
with the Company dated August 1, 2001 as may be amended and in effect from time
to time.

Date of Option Grant: November 8, 2001

Name of Optionee: William McGlashan, Jr.

Optionee's Social Security Number:

Number of Shares Covered by Option: 813,000

Exercise Price per Share: $1.13

Vesting Start Date: November 8, 2001


Optionee: /s/ William McGlashan

Company:  /s/ David Hayden




                               CRITICAL PATH, INC.



NONSTATUTORY STOCK OPTION       This option is not intended to be an incentive
                                stock option under section 422 of the Internal
                                Revenue Code and will be interpreted

VESTING                         The Shares under this option will vest in
                                accordance with the vesting schedule indicated


        (i)    271,000          Vested upon date of option grant.

        (ii)   271,000          Vested on August 1, 2002.

        (iii)  271,000          Vested on December 31, 2004 with earlier full
                                vesting upon the Company's attainment of
                                positive Earnings Before Interest Taxes
                                Depreciation and Amortization ("EBITDA") for any
                                fiscal quarter provided such positive EBITDA
                                occurs for a fiscal quarter in or before the end
                                of the second fiscal quarter of 2002. EBITDA
                                will be determined by the Company's independent
                                public accountants using the Company's financial
                                statements as reported in filings with the
                                Securities and Exchange Commission ("SEC").
                                Earnings, for EBITDA determination purposes,
                                will include revenue from only normal business
                                operations and will not include any
                                extraordinary or nonrecurring income or revenue


                                Your option vesting will cease in the event that
                                your employment and service as a Company
                                director both terminate for any reason. Your
                                option vesting will also cease upon your
                                voluntary resignation of employment or upon a
                                termination for Cause (as such terms are defined
                                in your employment agreement with the Company).
                                A leave of absence, regardless of the reason,
                                shall be deemed to constitute the cessation of
                                your employment unless the Company authorizes
                                such leave, and you return within the time
                                specified in such authorization.

                                The above performance-based acceleration
                                triggers will cease to be applicable upon your
                                prior cessation of employment for any reason.
                                The Compensation Committee of the Board of
                                Directors must certify in writing that the
                                performance goals have been satisfied before any
                                Option vesting will be accelerated pursuant to
                                attainment of performance goals.

                                In the event of a Change in Control of the
                                Company, 100% of your then-unvested Options
                                (meaning 100% of your unvested Options that are
                                otherwise scheduled to vest under (ii), and
                                (iii) above on each vesting date had a Change in
                                Control not occurred) shall become vested
                                provided that you are employed by the Company on
                                the date the negotiations or communications
                                began (as determined by the Board in good faith)
                                which lead to the Change in Control.

                                For purposes of this Agreement, a "Change in
                                Control" of the Company shall be defined as the
                                occurrence of any one of the following:

                                (i)     the consummation of a merger or
                                        consolidation of the Company with or
                                        into another entity or any other
                                        corporate reorganization, if more than
                                        50% of the combined voting power of the
                                        continuing or surviving entity's
                                        securities outstanding immediately after
                                        such merger, consolidation or other
                                        reorganization is owned by persons who
                                        were not shareholders of the Company
                                        immediately prior to such merger,
                                        consolidation or other reorganization;

                                (ii)    the sale, transfer or other disposition
                                        of all or substantially all of the
                                        Company's assets;

                                (iii)   the dissolution, liquidation or winding
                                        up of the Company;

                                (iv)    any transaction as a result of which any
                                        person is the "beneficial owner" (as
                                        defined in Rule 13d-3 under the


                                        Securities Exchange Act of 1934),
                                        directly or indirectly, of securities of
                                        the Company representing at least 20% of
                                        the total voting power represented by
                                        the Company's then outstanding voting

                                For purposes of this section, the term "person"
                                shall have the same meaning as when used in
                                sections 13(d) and 14(d) of the Securities
                                Exchange Act but shall exclude: (A) trustee or
                                other fiduciary holding securities under an
                                employee benefit plan of the Company or a
                                subsidiary of the Company; (B) A corporation
                                owned directly or indirectly by the shareholders
                                of the Company in substantially the same
                                proportions as their ownership of the common
                                stock of the Company; and (C) the Company.

                                A transaction shall not constitute a Change in
                                Control if its sole purpose is to change the
                                state of the Company's incorporation or to
                                create a holding company that will be owned in
                                substantially the same proportions by the
                                persons who held the Company's securities
                                immediately before such transactions.

TERM                            Your option will expire in any event at the
                                close of business at Company headquarters on the
                                day before the 10th anniversary of the Date of
                                Grant, as shown on the cover sheet. It will
                                expire earlier if your employment and your
                                service as a Company director terminate, as
                                described below.

REGULAR TERMINATION             If your employment and your service as a Company
                                director terminate for any reason except Cause,
                                death or Disability, then your option will
                                expire at the close of business at Company
                                headquarters on the 90th day after your
                                termination date.

CAUSE                           If your employment or service as a Company
                                director terminates on account of Cause, then
                                your option will expire immediately.

DEATH                           In the event of your death during the period of
                                your employment or service as a Company
                                director, your option will expire at the close
                                of business at Company headquarters on the date
                                six months after the date of death. During that
                                six-month period, your estate or heirs may
                                exercise your option.


DISABILITY                      If your employment and service as a Company
                                director terminate because of your Disability,
                                then your option will expire at the close of
                                business at Company headquarters on the date six
                                months after your termination date.

                                "Disability" means that you are unable to engage
                                in any substantial gainful activity by reason of
                                any medically determinable physical or mental

LEAVES OF ABSENCE               For purposes of this option, your employment
                                does not terminate when you go on a bona fide
                                leave of absence, that was approved by the
                                Company in writing, if the terms of the leave
                                provide for continued service crediting, or when
                                continued service crediting is required by
                                applicable law. Your employment terminates in
                                any event when the approved leave ends if you
                                fail or refuse to return to active service.

                                Consistent with the terms of this Agreement and
                                your Employment Agreement, the Company
                                determines which leaves count for this purpose,
                                and when your employment terminates for all
                                purposes under the Plan.

RESTRICTIONS ON EXERCISE        The Company will not permit you to exercise this
                                option if the issuance of Shares at that time
                                would violate any law or regulation.

NOTICE OF EXERCISE              When you wish to exercise this option, you must
                                notify the Company by filing the proper "Notice
                                of Exercise" form at the address given on the
                                form. Your notice must specify how many Shares
                                you wish to purchase. Your notice must also
                                specify how your Shares should be registered (in
                                your name only or in your and your spouse's
                                names as community property or as joint tenants
                                with right of survivorship). The notice will be
                                effective when received by the Company.

                                If someone else wants to exercise this option
                                after your death, that person must prove to the
                                Company's satisfaction that he or she is
                                entitled to do so.

FORM OF PAYMENT                 When you submit your notice of exercise, you
                                must include payment of the option price for the
                                Shares you are purchasing. Payment may be made
                                in one (or a combination) of the following

                                -       Your personal check, a cashier's check
                                        or a money order.

                                -       By delivery (on a form prescribed by the
                                        Committee) of an


                                        irrevocable direction to a securities
                                        broker to sell Shares and to deliver all
                                        or part of the sale proceeds to the
                                        Company in payment of the aggregate
                                        Exercise Price.

WITHHOLDING TAXES               You will not be allowed to exercise this option
                                unless you make acceptable arrangements to pay
                                any withholding or other taxes that may be due
                                as a result of the option exercise or the sale
                                of the Shares acquired upon exercise of this

RESTRICTIONS ON RESALE          By signing this Agreement, you agree not to sell
                                any option Shares at a time when applicable laws
                                or regulations or Company or underwriter trading
                                policies prohibit a sale.

                                You represent and agree that the Shares to be
                                acquired upon exercising this option will be
                                acquired for investment, and not with a view to
                                the sale or distribution thereof.

                                In the event that the sale of Shares under the
                                Plan is not registered under the Securities Act
                                but an exemption is available which requires an
                                investment representation or other
                                representation, you shall represent and agree at
                                the time of exercise to make such
                                representations as are deemed necessary or
                                appropriate by the Company and its counsel.

                                Prior to any Change in Control of the Company,
                                the shares acquired under this option can be
                                sold or transferred only pursuant to an SEC Rule
                                10b5-1 trading plan that is pre-approved by the
                                Board of Director's Compensation Committee.

TRANSFER OF OPTION              Prior to your death, only you may exercise this
                                option. You cannot transfer or assign this
                                option. For instance, you may not sell this
                                option or use it as security for a loan. If you
                                attempt to do any of these things, this option
                                will immediately become invalid. You may,
                                however, dispose of this option in your will.

                                Regardless of any marital property settlement
                                agreement, the Company is not obligated to honor
                                a notice of exercise from your spouse or former
                                spouse, nor is the Company obligated to
                                recognize such individual's interest in your
                                option in any other way.

NO RETENTION RIGHTS             Your option or this Agreement does not give you
                                the right to be retained by the Company (or any
                                subsidiaries) in any capacity. The Company (and
                                any subsidiaries) reserves the right to
                                terminate your Service at any time and for any


SHAREHOLDER RIGHTS              You, or your estate or heirs, have no rights as
                                a shareholder of the Company until a certificate
                                for your option Shares has been issued. No
                                adjustments are made for dividends or other
                                rights if the applicable record date occurs
                                before your stock certificate is issued, except
                                as described in the Plan.

ADJUSTMENTS                     In the event of a stock split, a stock dividend
                                or a similar change in the Company stock, the
                                number of Shares covered by this option and the
                                exercise price per share may be adjusted
                                pursuant to the Plan. Your option shall be
                                subject to the terms of the agreement of merger,
                                liquidation or reorganization in the event the
                                Company is subject to such corporate activity,
                                except to the extent the foregoing conflict with
                                or are in any way inconsistent with Section 8 of
                                your employment agreement.

FORFEITURE                      If, at any time within one year after
                                termination of employment, you engage in any of
                                the following: (i) your commission of a felony
                                or an act constituting common law fraud, in each
                                case having a material adverse effect on the
                                business or affairs of the Company or its
                                affiliates or stockholders; (ii) your willful or
                                intentional breach of Company confidential
                                information obligations, in each case having a
                                material adverse effect on the business or
                                affairs of the Company or its affiliates or
                                stockholders; then (1) this option shall
                                terminate and be forfeited effective the date on
                                which you enter into such activity, unless
                                terminated or forfeited sooner by operation of
                                another term or condition of this option or the
                                Plan, (2) any stock acquired by you pursuant to
                                the exercise of this option during the
                                Forfeiture Period (as defined below) shall be
                                forfeited, and (3) any gain realized by you from
                                the sale of stock acquired through the exercise
                                of this option during the Forfeiture Period
                                shall be paid by you to the Company. The
                                "Forfeiture Period" shall mean the period
                                commencing six months prior to your termination
                                of employment and ending one year from your
                                termination of employment.

RIGHT OF SET OFF                By accepting this Agreement, you consent to a
                                deduction from any amounts the Company owes you
                                from time to time; to the extent of the amounts
                                you owe the Company under the paragraph above.
                                If the Company does not recover by means of
                                set-off the full amount you owe it, calculated
                                as set forth above, you agree to pay immediately
                                the unpaid balance to the Company upon the
                                Company's demand.

LEGENDS                         All certificates representing the Shares issued
                                upon exercise of this option shall have endorsed
                                thereon the applicable legends.


APPLICABLE LAW                  This Agreement will be interpreted and enforced
                                under the laws of the State of California.

THE PLAN AND OTHER AGREEMENTS   The text of the Plan and your employment
                                agreement are incorporated in this Agreement by
                                reference. Certain capitalized terms used in
                                this Agreement are defined in the Plan or your
                                employment agreement.

                                This Agreement, the Plan and your employment
                                agreement with the Company dated August 1, 2001
                                constitute the entire understanding between you
                                and the Company regarding this option. Any prior
                                agreements, commitments or negotiations
                                concerning this option are superseded.